Innovation Comes Home to Go Global

Thursday, April 5, 2012

MUMBAI: Innovation in India used to be largely about developing products for personal consumption and cheaper no-frills versions of existing devices. Many were developed only to be shipped to global markets. Now, led by the country’s technological capabilities and buoyed by the burgeoning middle class, companies across sectors such as white goods, mobile handsets, pharmaceuticals and medical devices, and services like healthcare and telecom, are rolling out innovations. And the big change is that the products are targeted at the domestic consumer and for those at the bottom of the pyramid.

For instance, realizing the country’s strong R&D capabilities, US giant GE in 2000 set up a centre for developing products for the global markets – years later products customized for the domestic market rolled out. Today, GE’s MAC 400 (a portable ECG device), lullaby baby warmers and Vivid P3 (a cardiac imaging ultrasound system) are not only sold in the country but also exported to developed countries. Most of these are 30 to 70% cheaper than the imported versions. Tata’s Nano and Adarsh tablet are already well known.

Innovation has risen out of necessity, survival instincts or economic opportunities, experts say. The quest is a result of a necessity to come up with affordable and cheaper options, with the model varying from disruptive thinking (allow a new set of consumers access to a product that was historically only accessible to those with a lot of money) to those who pursue frugal innovation. So, inspired by disruptive thinking – popularized by Harvard professor Clayton Christensen – Godrej Appliances developed chotukool, a cooling solution, at nearly half the cost of an entry-level refrigerator.

Experts point out that Indians have used their re-engineering skills effectively, particularly in sectors like pharma, by introducing copy-cat versions of medicines. Says Sujay Shetty, partner, PwC India, “Indian generic firms have helped Africa enormously in terms of affordability especially for HIV drugs, where prices have driven down by 80-90%.”

Now, the challenge is to develop more products for those at the bottom of the pyramid. Vijay Govindarajan, a professor at Tuck School of Business and an expert on strategy and innovation, says: “Indian companies must innovate for domestic consumers… Instead of value for money, our mantra has to be value for many or frugal innovation,” he said. “If we can succeed in India, we can transform lives of the rich world consumers or reverse innovation.”